ConAgra buying Ralcorp for about $5 billion
OMAHA, Neb. (AP) — ConAgra Foods is buying the private-label food maker Ralcorp for about $5 billion, which will make it North America's biggest manufacturer of cereals, crackers and other packaged foods sold under store brands.
The deal caps a year of acquisitions for ConAgra, which makes Banquet, Chef Boyardee and Marie Callender's. In the past year, the company also snapped up brands including National Pretzel, Bertolli frozen meals and Del Monte Canada.
The Ralcorp deal comes at a time when private label brands — also known as store brands or house brands — are gaining popularity with shoppers. Supermarkets and drug stores have been working to improve the image of their store brands as a way to control the rising costs for national name brands. Private label brands now account for 28 percent of all food and drink consumed in the U.S., up from 20 percent about a decade ago, according to market researcher The NPD Group.
As private labels become a bigger business, however, major supermarkets have also invested in producing private label brands in their own factories. Ralcorp's customers include Wal-Mart Stores Inc., Kroger Co. and McDonald's Corp.
"Clearly, consumer dynamics have changed since the recession and we expect growth in private label food to continue to outpace growth in branded food," ConAgra CEO Gary Rodkin said in a statement.
ConAgra Foods Inc. said Tuesday that the acquisition will strengthen its overall position in the North American packaged food business. Ralcorp's products also include pasta, snack mixes and frozen waffles.
The companies said that their products are complementary to one another, with very little overlap. The combined company will have total sales of about $18 billion annually and more than 36,000 workers.